Playhouse needs a plan to retire debt

Published: Friday, December 6, 2013 at 5:44 a.m.

Last Modified: Friday, December 6, 2013 at 5:44 a.m.

The Flat Rock Playhouse faces a fundraising conundrum. It continues to need government support, but local entities are reluctant to provide ongoing funding given last yearís public uproar over the issue, and that is hurting the theaterís ability to raise major donations.

Facing a financial crisis several years in the making, leaders of the nonprofit theater said last fall the Playhouse needed to raise $250,000 just to finish the season, and closer to $1 million to stabilize finances. The Playhouse ended up raising $500,000, enough to stay in business, but its finances remain ďfragile,Ē Hillary Hart, the theaterís managing director, told Times-News staff writer Nathaniel Axtell.

Local governments pitched in $300,000 last year to help avert a crisis that could have closed the 60-year-old attraction, but scaled back to $35,000 this year. Hart says thatís hurting both the theaterís ability to pay down debt and build an endowment to become more self-sustaining, and hampering fundraising. She blamed lack of support from local governments for the Playhouse being turned down for several large corporate grants this year.

This comes after a controversy that persisted through much of last year over the theaterís finances, sparked after Playhouse leaders requested a 1-cent increase in the occupancy tax to help provide ongoing local financial support. County commissioners refused in August of last year to do that amid charges that the theater had mismanaged its finances. Although Playhouse leaders deny there was any mismanagement, it was clear that the theater overextended its production capabilities immediately following the economic downturn.

The Playhouse ended up dropping its call for an increase in the room tax to fund theater operations. As the controversy cooled down, the theater was able to make significant strides financially. The half-million dollars raised was enough to avert a crisis and put it back in the black, but not enough to solidify funding for the long haul. The Playhouse still carries $500,000 to $600,000 in long-standing debt and will face increased rent next year at its downtown location.

Following its near-shuttering last fall, the theater reduced the number of shows offered, cut roughly $300,000 in expenses when ticket sales didnít meet goals and increased its number of donors from 750 to 943. Trimming the number of shows by two next year is a wise move and indicates Playhouse leaders understand the danger of saturating a limited market.

Playhouse leaders say the theaterís estimated $10 million to $14 million in local economic impact contribution warrants increased local government support. While the Playhouseís $2.2 million from 2012 ticket sales and other ďearnedĒ revenue exceeded the national average, Hart says, its $1.49 million in contributed income fell below the national average of $2.1 million for a theater its size.

Getting local governments to increase support remains a chicken-and-egg proposition. Playhouse leaders should present local governments with a firm plan for retiring the theaterís debt. That will increase confidence that any new tax dollars allocated to the Playhouse will be wisely spent and leveraged to the maximum extent possible.

<p>The Flat Rock Playhouse faces a fundraising conundrum. It continues to need government support, but local entities are reluctant to provide ongoing funding given last year’s public uproar over the issue, and that is hurting the theater’s ability to raise major donations.</p><p>Facing a financial crisis several years in the making, leaders of the nonprofit theater said last fall the Playhouse needed to raise $250,000 just to finish the season, and closer to $1 million to stabilize finances. The Playhouse ended up raising $500,000, enough to stay in business, but its finances remain fragile, Hillary Hart, the theater’s managing director, told Times-News staff writer Nathaniel Axtell.</p><p>Local governments pitched in $300,000 last year to help avert a crisis that could have closed the 60-year-old attraction, but scaled back to $35,000 this year. Hart says that’s hurting both the theater’s ability to pay down debt and build an endowment to become more self-sustaining, and hampering fundraising. She blamed lack of support from local governments for the Playhouse being turned down for several large corporate grants this year.</p><p>This comes after a controversy that persisted through much of last year over the theater’s finances, sparked after Playhouse leaders requested a 1-cent increase in the occupancy tax to help provide ongoing local financial support. County commissioners refused in August of last year to do that amid charges that the theater had mismanaged its finances. Although Playhouse leaders deny there was any mismanagement, it was clear that the theater overextended its production capabilities immediately following the economic downturn.</p><p>The Playhouse ended up dropping its call for an increase in the room tax to fund theater operations. As the controversy cooled down, the theater was able to make significant strides financially. The half-million dollars raised was enough to avert a crisis and put it back in the black, but not enough to solidify funding for the long haul. The Playhouse still carries $500,000 to $600,000 in long-standing debt and will face increased rent next year at its downtown location.</p><p>Following its near-shuttering last fall, the theater reduced the number of shows offered, cut roughly $300,000 in expenses when ticket sales didn’t meet goals and increased its number of donors from 750 to 943. Trimming the number of shows by two next year is a wise move and indicates Playhouse leaders understand the danger of saturating a limited market.</p><p>Playhouse leaders say the theater’s estimated $10 million to $14 million in local economic impact contribution warrants increased local government support. While the Playhouse’s $2.2 million from 2012 ticket sales and other earned revenue exceeded the national average, Hart says, its $1.49 million in contributed income fell below the national average of $2.1 million for a theater its size.</p><p>Getting local governments to increase support remains a chicken-and-egg proposition. Playhouse leaders should present local governments with a firm plan for retiring the theater’s debt. That will increase confidence that any new tax dollars allocated to the Playhouse will be wisely spent and leveraged to the maximum extent possible.</p>